Friday, March 16, 2012

I can't find a clip yet, but last night on The Office, Dwight Schrute committed the fallacy that Andolfatto called Ron Paul out on (this was several months ago so I forget what happened next... I'm sure Andolfatto got a warm reception from those nice Paulites, though).

In the episode Nellie, a somewhat deranged character from the Tallahassee office, comes to the Scranton office and starts acting like the manager (in the hopes that she'll get the job eventually). One of the things she does to get buy-in from the employees is to do a "performance review" for each of them, after which she gives all of them a raise. It's Dwight's turn and to dissuade him Jim says that "the money isn't real - it's not worth anything". Dwight responds "None of our money has been worth anything since we went off the gold standard".

Except that's not quite right. Yes, the purchasing power of the dollar has gone down, but wages have gone up! What would you think of a presidential candidate who got up and said "Isn't it great - the amount of money on your paycheck has gone up persistently year after year! And look at profits! We're always setting 'record profits'! To say nothing of home prices - sure we had some trouble a coupl years back, but if you look at the whole century, house prices keep getting higher and higher!"

You would say "well, OK, but all prices have increased over that period, so the fact that my paycheck keeps going up doesn't necessarily mean anything".

So why do so many people speak so highly of a presidential candidate that talks like this about one side of the price level - the value of the dollar??? Why is this guy praised as having a solid grasp of economics? Wouldn't you be deeply suspicious of a candidate that praises ever increasing paycheck figures? So why aren't you deeply suspicious of Ron Paul?

It's not a question of "left" or "right." The United States has been off of the gold standard for 79 years. No nation in modern times is on the gold standard. Ron Paul's view on this is not merely "right-wing", it is a fringe view. It is a view frequently encountered in people who exhibit other paranoid traits. Consequently, it fits Dwight's character perfectly.

Interesting; criticism from ignorance exhibit numerous fallacies when attacking the Gold standard. Although it's 2000 year existence, and post financial market resurgence, criticism is never addressing the idea itself; but rather find comfort behind intellectual fallacies; such as ad-populum exhibited here. It's demonstrably more realistic to demonstrate that there have hundreds of instances of fiat currency failing (sometimes lasting 150 years before doing so). So practically, the use of commodity as money is simply a more reliable store of value. Although these are objective observations

If he had said it was wrong because it was fringe you'd have a point, but since he didn't say that its pretty clear you have little idea what the term "argumentum ad populum" actually means.

Ex: X says "Keynes was a terrible economists!"Y says "No he wasn't he was accepted as the consensus of the day.." <- Appeal to Popularity

Somewhat closer analogy to the above:X says "Mises was an excellent economist!"Y says "Perhaps, but his views were viewed as fringe by the profession which tends to attract a certain element.." <- Not an appeal to popularity as it doesn't make any specific claim about the rightness or wrongness of his case due to its relative popularity. Now if its used as a response to a point like in the above Mises example it might be a red herring, but I'll be so bold as to speak for Will here and say that's not what he was doing. This stuff really isn't hard..

Paul doesn't highlight it often (because he is not speaking to a crowd of students or postdocs trained in economics) but the whole point of talking about the erosion of the monetary unit is to emphasize the non-neutrality of money in the short run.

But of course, money is neutral in the long run. Who cares if the money unit is 50% of what it used to be if your paycheck is 200% what it used to be? I understand that point, Daniel. But Paul is trying to bring attention to the interim process. In the short run, money is most certainly not neutral and large influxes of it benefit specific people and organizations at the expense of other people and organizations. The "theft" that occurs during inflation is a very real process. "Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again."